Even public housing is not immune to Hong Kong's property frenzy

Public and private housing blocks are seen in Hong Kong.
Public and private housing blocks are seen in Hong Kong. PHOTO: REUTERS

HONG KONG (BLOOMBERG) - Hong Kong's property boom is spreading to public housing.

A 126-square-foot apartment at the Fung Tak Estate in Hong Kong's Kowloon district sold for HK$1.95 million (S$339,359) early last month, a record for a public-housing unit, Full Mark Property Agency said.

The HK$15,476 per square foot price even topped some private flats in the district - an apartment at Lions Rise, a private development a 15-minute walk from Fung Tak, recently sold for HK$14,638 per square foot, Centaline Property Agency figures show.

Public-housing flats are not the only properties breaking records in Hong Kong's gravity-defying market. A car park building in Central sold for US$3 billion (S$4 million) in May, a waterfront residential site fetched US$2.2 billion in February and the city's gauge of home prices reached a record high earlier this month.

Property agents say buyers for small public housing units are mostly investors, as the rental yield can reach 4 per cent or more. The average rental yield for small units is 2.8 per cent, according to the Rating and Valuation Department.

"Small single flats for rent are rare and popular in the area, they usually get rented out within a month after the transactions are done," said branch manager Kim Chan at Full Mark Property Agency.

The public housing units are a holdover from a programme that previously allowed tenants to buy apartments they were renting at subsidised costs. The homeowners who had bought properties under the now-discontinued Tenants Purchase Scheme are still allowed to resell their houses in the open market, provided they pay a premium to the government.